Insurance and Private Pensions Sector in Turkey M. Akif EROĞLU General Secretary 04/10/2018
AGENDA i. Turkish Insurance Market: An Overview ii. MTPL 1 . Reducing Traffic Accidents 2. Tariff System 3. Regulation 4. Court & Insurance Arbitration iii. Auto-enrollment iv. Recommendations to develop Insurance & Private Pensions Industry v. The Bottomline 2
I. Turkish Insurance Market: An Overview 3
Main Indicators Number of companies: 63 Non-life: 39 Life and Pension: 22 Reinsurance : 2 Total Assets: (2018/6): 164,8 Bln TL (40,3 bln USD) Premium Production: 2018/6: 26,7 Bln TL (6,5 bln USD) 2017: 46,6 Bln TL (12,8 bln USD) Source: SDK 2017, TSB , 1 USD = 4,0865 TL, 2018 Q2 Exchange Rate for USD 4
BES & Auto-enrollment: Total Funds & Number of Participants (21.09.18) Number of Total Funds Participants (mln) 90,7 bln TL (22,0 Bln $) 12,0 3,8 bln TL 100 14 930 mln $ 90 12 80 5,0 10 70 60 8 86,9 50 bln TL 6 40 (21,3 bln $) 30 4 7,0 20 2 10 0 0 BES OKS BES OKS 5 Source: 21.09.2018 EGM
Growth of GDP & Premium Production (%) 25 20,2 20 15 13,8 13,6 10 9,7 8,9 10 8,8 7,4 8,5 6,1 4 5 3,2 2,9 2,7 2,2 -0,8 0 2010 2011 2012 2013 2014 2015 2016 2017 -5 Growth Rate of GDP Growth Rate of Premium Source: TSB, TÜİK 6
Breakdown of Premium Production by Non-life Branches (2018/8) Other 7,3% Accident 3,9% MTPL 33,5% Sickness/Health 13,2% Motor : %49,4 Fire and Nat. Cat. 13,7% Land Vehicles 15,9% General Damage 12,5% Soruce: TSB August 2018 7
Gross Loss Ratio by Branches (2018/Q2 & 2017/Q2) 100 Gross loss ratio (%) 93 88 90 80 76 70 69 68 70 60 50 42 41 38 38 37 40 37 30 18 18 20 14 14 10 0 Traffic Land Vehicles Fire and Natural TARSİM General Losses Accident Total Non-Life Life Disaster 2018Q2 2017Q2 Source: TSB June 2018 Gross Loss Ratio 8
Profitability (2018/6 – 2017/6) Technical Profit (million USD) 500 429 2018/6 2017/6 400 353 300 200 178 166 108 92 90 88 100 56 56 52 52 41 41 41 35 29 30 28 25 22 17 9 6 5 -3 2 0 1 -31 -6 -23 - -100 9
Profitability (2018/Q2) Non-life Insurance 1,8 billion TL (428,6 mln $) Life Insurance 727 million TL (177,8 mln $) Private Pensions 213 million TL (52 mln $) Total Technical Profit 2,7 billion TL (658,4 mln $) Net Profit 2,8 billion TL ( 684,8 mln $) 01/07/2017 – 30/06/2018 Non-Life Life ROE %17 %39,4 Source: TSB June 2018 Income Statement 10
II. Agenda: MTPL 11
MTPL Technical Results In 12,5 years, total loss: 8 bln TL 2.500 2.000 1.500 1.000 500 0 -500 -1.000 -1.500 -2.000 -2.500 -3.000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018/Q2 MTPL -119 -119 -245 -245 -467 -467 -296 -296 -587 -587 -462 -462 -1.285 -1.285 -654 -654 -885 -885 -2.385 -2.385 19 19 -538 -536 -96 -96 Non-life 32 32 232 232 427 427 130 130 3 3 58 58 -589 -589 834 834 1.030 1.030 -499 -499 1.744 1.744 2.090 2.090 1.661 1.661 Source: TSB June 2018 Income Statement 12
MTPL Technical Results (million TL) 500 19 -96 0 -538 -658 -500 -869 -1.000 -1.500 -1.367 -2.000 -2.385 -2.500 -3.000 -3.500 -4.000 -4.500 -2.728 -5.000 -5.500 2015 2016 2017 2018/Q2 Technical Profit ( Excluding Investment Income Transfered from -2.728 -869 -1.367 -658 -2.728 -869 -1367 -658 Non-Technical Part) Technical Profit -2.385 -2.385 19 19 -538 -538 -96 -96 Technical Profit Technical Profit ( Excluding Investment Income Transfered from Non-Technical Part) MTPL 2015 2016 2017 2018/Q2 Technical Profit -2.385 19 -538 -96 Investment Income Transfered from Non-Technical Part 343 888 829 563 Technical Profit ( Excluding Investment Income Transfered from Non-Technical Part) -2.728 -869 -1.367 -658 13
The Reason Are: MTPL Price Cap Traffic Accidents Regulation Effect Issues on the Court Stages 14
Main Reasons: Traffic Accidents 15
Traffic Accidents: High frequency EU-Turkey Claims Frequency (2014) 10% %9 9% 8% 7% %5,9 6% 5% 4% 3% 2% 1% 0% Turkey EU Source: 2016, European Motor Insurance Markets Addendum , TÜİK 16
Traffic Accidents: High claim EU vs. Turkey: Fatality in the accidents per 100 thousand people 9 Number of people lost their lives in the traffic accidents 4 Turkey EU Source: IRTAT , 2016 17
Traffic Accidents: Traffic Monsters 303 79,6 thousand thousand Accident Drivers The number of accidents by those drivers who caused 3 and more accidents in the preceeding 3 year-period. (2014-2017 May) 18
Main Reasons:MTPL Price Cap Price Cap 19
MTPL: Claims and Expenses Loss Ratio Combined Ratio % 118,4 % 134,7 20
MTPL: Claims and Expenses High Risk Insurance Pool Loss Ratio Combined Ratio % 123,7 % 136,7 21
Main Reasons: Regulation Regulation effect 22
Main Reasons: Regulation No standardization in the calculation of claims (deprivation of support and permanent disability) No standardization in the calculation of loss in value Limitation of usage of equivalent spare parts 23
Main Reasons: Regulation / Increase of Bodily Injuries The share of bodily injuries claims within the total paid claims has increased rapidly in recent years. 60% 52% 51% 51% 47% 50% 38% 35% 40% 26% 30% 17% 16% 20% 15% 13% 13% 13% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 24
Main Reasons Regulation / Increase of loss in value Application Rates of Insurance Arbitration Commission Number of application increased from • 120,00% 26.000 to 85.000 between the years 2015 to 2017. 100,00% 80,00% 60,00% % 95 of application is 40,00% MTPL, % 75 of application is loss in value. 20,00% 0,00% 2010 2011 2012 2013 2014 2015 2016 2017 MTPL Casco 25
Main Reasons: Regulation / Decrease of Equivalent Spare Part Usage Usage rates of Original/Equivalent Spare Parts 80% 70% 60% 50% 40% 30% 20% 10% 0% Şub.14 May.14 Şub.15 May.15 Şub.16 Oca.14 Mar.14 Nis.14 Haz.14 Tem.14 Ağu.14 Eyl.14 Eki.14 Kas.14 Ara.14 Oca.15 Mar.15 Nis.15 Haz.15 Tem.15 Ağu.15 Eyl.15 Eki.15 Kas.15 Ara.15 Oca.16 Mar.16 Nis.16 Usage rate of Original Spare Parts (%) Usage rate of Equivalent Spare Parts (%) 26
Main Reasons: Court Decisions Issues on the Court stages 27
Court/Arbitration Decisions Ensuring that court decisions are in compliance with the regulation Decisions taken in Decisions taken not compliance with the in compliance with regulation the regulation Courts 39 42 Arbitration 24 27 Total 63 69 28
Insurance Arbitration System Average claims amount increased to 5.000 TL from 1.000 TL in six years. (2011-2017 Arbitration Fee 100 TL 5.195 TL %155 Arbitrator Fee 350 TL 3.385TL Expert Fee 330 TL The overall cost of loss 2.037 TL Legal Expenses 1800 TL in value by Loss in value Average cost calculated arbitration of demands Total 2580 TL by made for arbitration loss in value *Includes expenses for experts and legal expense 29
II. Agenda MTPL Efforts 30
Association Efforts MTPL Action Plan Reducing Traffic Accidents Action for the Tariff system Action for the Regulation Action for the Court/Insurance Arbitration System 31
II. Agenda MTPL Efforts 1. Reducing Traffic Accidents 32
Reducing Traffic Accidents: Workshop We have taken initiative with all the stakeholders relating to the road safety in order to achieve radical fall in the frequency of traffic accidents 33
Decreasing Traffic Accidents:Collaboration with Traffic Authority 34
Social Media Entries 35
Reducing Traffic Accidents:Collaboration with Traffic Authority #Bu Kemer Sana Çok Yakışır 36
Reducing Traffic Accidents: Recommendations Sharing of drivers’ penalty scores for using in tariffs Reduce black holes on traffıc Training support/rehabilitation of drivers who make frequent accident Suspending driving licence of drivers who make frequent accident Colloboration with Universities and Education Ministry Expanding the protocol on the sharing of the bodily injury minutes Promoting telematics and smart security systems in vehicles 37
II. Agenda MTPL Efforts 2. Tariff System 38
Actions taken for the Tariff System Revising Premium Cap based on An increase in Premium cap The result of UW year basis for the MTPL Pool An increase in monthly The effect of exchange rate on costs adjustment rate Implementing the free tariff in vehicle groups in the segments outside the pool Revision of some intermediary costs and public expenses on MTPL tariff Declining the rate of Social Security Institution ’ s(SGK) share 39
II. Agenda MTPL Efforts 3. Regulation 40
Regulation: General Terms Standart calculation method on the loss of support indemnity Regulation Standart calculation of loss in value Expanding the usage of equivalent spare parts Removal of TSE exclusivity /OSEM) Supporting domestic equivalent spare production to help Special minimizing current deficit (500 million USD less import) Thanks. 41
II. Agenda MTPL Efforts 4. Court & Insurance Arbitration 42
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